Current Awareness in Aging Research (CAAR) Report #41--July 6, 2000

CAAR (Current Awareness in Aging Research) is a weekly email report produced
by the Center for Demography of Health and Aging at the University of Wisconsin-Madison
that helps researchers keep up to date with the latest developments in the field.
For more information, including an archive of back issues and subscription information
see:

NOTE: Due to office relocations, there will be no CAAR report next week, July
13, 2000. The CAAR Report will return on July 20, 2000. Look for reports to
come from my Data Library colleague Charlie Fiss from July 20 through mid-August,
2000, as I will be teaching a class in the UW Library School during this time.

1. HRS/AHEAD DATA ALERTS: The University of Michigan Institute for Social Research
Health and Retirement Study/Asset and Health Dynamics Among the Oldest Old (HRS/AHEAD)
website announced 2 Data Alerts and a revised Data Alert on Jun. 30 and Jul.
3, 2000.

The imputation files can be found under "Public Release Datasets and Files."
Note: users must register before downloading HRS/AHEAD data.
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II. Reports and articles:

2. UN REPORT: The United Nations has released _Human Development Report 2000_,
(June 2000, .pdf format, 290p.). It is highlighted by 32 Human Development Indicators
tables. The report can be downloaded in sections.

4. OBSSR NIH REPORT: "Description of Behavioral and Social Sciences Research"
(Office of Behavioral and Social Sciences Research, National Institutes of Health,
May 2000, .pdf format, 68p.). "At the request of the United States Senate,
OBSSR submitted a report in May 2000 that provides an overview of behavioral
and social sciences research at NIH. The Report includes the definition of behavioral
and social sciences research as well descriptions of each Institute's BSSR activities."

5. DHHS OEI OIG REPORT: The Office of Evaluations and Inspections of the Office
of the Inspector General of the US Department of Health and Human Services has
released "Unidentified Primary Health Insurance: Medicare Secondary Payer
Auxiliary File" (OEI-07-98-00180, June 2000, .pdf format, 31p.).

>From the Abstract:

Overall, the MSP auxiliary file accurately documents primary insurance. Less
than one half of one percent of beneficiaries in our sample with primary health
insurance coverage were not identified in the file. We found only a few instances
where other health insurance was undetected, with losses to Medicare of approximately
$56 million in 1997. We also noted that the Initial Enrollment Questionnaire,
which is designed to capture primary coverage information at the point of Medicare
entitlement, does not always do so because a number of beneficiaries do not
respond. We recommended that HCFA emphasize to providers the requirement that
they obtain and report insurance coverage information at each beneficiary office
visit. To increase the response rate for the questionnaire, we recommended several
options for HCFA to consider. The HCFA generally concurred with our recommendations.

The conventional wisdom that middle-aged workers face an increased risk of
being displaced and increased difficulties after displacement is partially borne
out by this article's analysis. Displacement rates among middle-aged workers
rose relative to younger workers during the 1990s recession, and the relative
likelihood of displacement for middle-aged workers has not returned to the levels
of the 1980s. Thus, workers in their forties are relatively more likely to have
been displaced in the 1990s than in the 1980s. However, the two postdisplacement
outcomes examined here, reemployment and earnings losses, have not changed significantly
over time for older workers relative to younger workers. According to the authors,
the data also suggest that much of the concern about displacement may soon begin
to abate. Displacement rates during 1995-97 returned to levels similar to those
during the 1980s expansion. Reemployment rates for workers displaced during
1995-97 were at their highest levels for all age groups since the mid-1980s,
and the gap between pre- and postdisplacement earnings has shrunk during the
most recent period.

Older consumers, who are expected to account for an increasing share of consumer
expenditures, have spending trends similar to those of younger consumers; however
the underlying tastes and preferences of subgroups of older consumers did not
change significantly over the period studied. This article includes elements
from earlier studies, but takes the analysis further: first, expenditure trends
are analyzed for different age groups within the older population; second, experiments
are designed to test whether tastes and preferences differ over time for older
consumers.

The paper discusses the consequences for the functioning of different pension
systems of various types of socioeconomic changes, mainly demographic developments,
variations in productivity growth and changes in real interest rates. Two of
the pension systems have exogenous and four have endogenous contribution rates.
I analyze both marginal and radical pension reforms for the purpose of making
pension systems more stable, avoiding arbitrary redistributions between generations
and dealing with increased heterogeneity of the population in terms of family
structure and international mobility. The advantages of combining PAYGO and
actuarially fair systems are pointed out.

Whether and how estates and gifts should be taxed has long been a controversial
subject, and the approach to estate and gift taxation varies among developed
countries. Arguments for and against various forms of transfer taxation have
focused on concerns about the distribution of income and wealth, intergenerational
equity, raising revenue, savings incentives, and other economic and philosophical
issues. This essay has two purposes. The first is to examine the conceptual
basis for various arguments for and against the current estate and gift tax
regime and proposed alternatives. The second is to integrate policy analysis
of transfer taxation with that of the rest of the tax system, notably, the income
tax. The analysis begins by considering how it would be optimal to tax transfers
if they are viewed as simply one of many forms of expenditure by donors, and
then it explores how the distinctive features of gifts and bequests may alter
the conclusions. The importance of different transfer motives is discussed,
and the analysis is reconsidered in the light of the importance of human capital
in intergenerational transfers; differences between inter vivos transfers and
bequests, between gifts to individuals and gifts to charitable institutions,
and among gifts to donees having varying relationships to the donor; and the
possibility that transfers are not explained by maximizing behavior.

Worldwide, dependency ratios are forecast to increase dramatically in the next
50 years. A great deal of attention has been devoted to understanding the changes
in fiscal policies that must take place to accommodate these changes. In contrast,
less effort has been concentrated on studying the fiscal shifts that will endogenously
result from demographic pressures. An example of particular interest is the
degree to which a more elderly population will support public spending for education.
We use an overlapping-generations model to investigate the effect of this demographic
transition on the endogenous determination of public spending for education.
A demographic transition alters the identity of the median voter, leading to
a preference for less education spending. If the public sector is inefficiently
small, demographic transition exacerbates the underprovision of human capital.
Alternatively, such a shift may trim an inefficiently large government, reduce
tax rates and raise capital per worker enough to raise education spending. Thus,
there is no automatic link between demographic transition and reduced support
for those programs whose benefits are concentrated among the young.

17. YALE UNIVERSITY COWLES FOUNDATION FOR RESEARCH IN ECONOMICS: "Social
Security Investment in Equities in an Economy with Short-Term Production and
Land," by Peter Diamond and John Geanakoplos (Discussion Paper 1259, June
2000, .pdf format, 42p.).

>From the Abstract:

This paper explores the general equilibrium impact of social security portfolio
diversification into private securities, either through the trust fund or via
private accounts. The analysis depends critically on heterogeneity in saving,
in production, in assets, and in taxes. Under fairly general assumptions we
show that limited diversification increases a neutral social welfare function,
increases interest rates, reduces the expected return on short-term equity (and
thus the equity premium), decreases safe investment and increases risky investment.
However, the effect on aggregate investment, long-term capital values, and the
utility of young savers hinges on delicate assumptions about technology. Aggregate
investment and long-term asset values often move in the opposite direction.
Thus social security diversification might reduce long-term equity value while
it increases aggregate investment.

A. "The Social Value of Health Programs: Is Age a Relevant Factor,"
by Jose Luis Pinto (Working Paper 473, June 2000, .pdf and PostScript formats,
40p.).

>From the Abstract:

In cost-effectiveness analysis (CEA) it is usually assumed that a QALY is of
equal value to everybody, irrespective of the patient's age. However, it is
possible that society assigns different social values to a QALY according to
who gets it. In this paper we discuss the possibility of weighting health benefits
for age in CEA. We also examine the possibility that age-related preferences
depend on the size of the health gain. An experiment was performed to test these
hypotheses. The results suggest that the patient's age is a relevant factor
when assessing health gains.

B. "Pay-as-you-go Social Security and the Distribution of Bequests,"
by Jordi Caball and Luisa Fuster (Working Paper 468, February 2000, .pdf format,
36p.).

>From the Abstract:

This paper studies the impact of an unfunded social security system on the
distribution of bequests in a framework where savings are due both by life cycle
and by random altruistic motivations. We show that the impact of social security
on the distribution of bequests depends crucially on the importance of the bequest
motive in explaining savings behavior. If the bequest motive is strong, then
an increase in the social security tax raises the bequests left by altruistic
parents. On the other hand, when the importance of bequests in motivating savings
is sufficiently low, the increase in the social security tax could result in
a reduction of the bequests left by altruistic parents under some conditions
on the attitude of individuals toward risk and on the relative returns associated
with private saving and social security. Some implications concerning the transitional
effects of introducing an unfunded social security scheme are also discussed.

19. Ageing and Society (Vol. 20, No. 3, May 2000). Note: Click on titles for
abstracts. This journal may be available in full electronic text (.pdf format)
to your organization. Check your organization's library.

21. Journal of Gerontology: Biological Sciences (A) (Vol. 55A, No. 8, August
2000). Note: This journal is available in electronic full text in the ProQuest
Research Library. Check your library for the availability of this database and
this issue.

22. AGING SOCIETY CHRONIC AND DISABLING CONDITIONS PROFILES UPDATE: The Aging
Society has added a new profile: "Depression: A Treatable Disease"
(Challenges for the 21st Century: Chronic and Disabling Conditions No. 9, July
2000, .pdf format, 6p.). Most of the data in this publication are taken from
the 1994 National Health Interview Survey of Disability Phase I (NHIS-D), Wave
1 of the Health and Retirement Study (HRS), and Wave 1 of the study of Assets
and Health Dynamics Among the Oldest Old (AHEAD).

Jack Solock
Data Librarian--Center for Demography and Ecology and Center for Demography
of Health and Aging
4470 Social Science
University of Wisconsin-Madison
Madison, WI 53706
608-262-9827jsolock@ssc.wisc.edu